scholarly journals The Impact of Tax, Product and Labour Market Distortions on the Phillips Curve and the Natural Rate of Unemployment

2007 ◽  
Author(s):  
Nikola Bokan ◽  
Andrew J. Hughes Hallett
Keyword(s):  
Labour Market ◽  
Phillips Curve ◽  
Natural Rate ◽  
Natural Rate Of Unemployment ◽  
The Impact

Labour market statistics

2019 ◽  
pp. 199-212
Author(s):  
Paul Bivand
Keyword(s):  
Labour Market ◽  
Phillips Curve ◽  
Labour Force ◽  
Data Use ◽  
International Labour Organisation ◽  
Gig Economy ◽  
Minimum Wage Legislation ◽  
Unemployment Data ◽  
New Forms Of Work ◽  
The Impact

The chapter begins by identifying the theoretical roots of labour market concepts, notably the Phillips Curve relating unemployment and inflation. It then presents the definitions of “employment” and “unemployment” developed by the International Labour Organisation. These are measured by the quarterly Labour Force Survey, which provides not just simple counts but also flows between these categories, here presented graphically. One problem is that localised unemployment data use different definitions from the national headline rate, but a larger problem is that in all measures individuals must be counted as either employed or unemployed, when increasing numbers of workers work fewer or more hours than they wish, sometimes on variable hours contracts or as insecure sub-contractors in the “gig economy”. These new forms of work, generally disadvantaged, make gathering reliable data harder, and the chapter ends by discussing earnings data, and measuring the impact of minimum wage legislation.

scholarly journals Recovering Keynesian Phillips curve theory: hysteresis of ideas and the natural rate of unemployment

2018 ◽  
Vol 6 (4) ◽  
pp. 473-492 ◽  
Author(s):  
Thomas Palley
Keyword(s):  
Economic Theory ◽  
Phillips Curve ◽  
50Th Anniversary ◽  
Theoretical Argument ◽  
Natural Rate ◽  
Macroeconomic Theory ◽  
Natural Rate Of Unemployment ◽  
Economics Profession ◽  
Curve Theory

Economic theory is prone to hysteresis. Once an idea is adopted, it is difficult to change. In the 1970s, the economics profession abandoned the Keynesian Phillips curve and adopted Milton Friedman's natural rate of unemployment (NRU) hypothesis. The shift was facilitated by a series of lucky breaks. Despite much evidence against the NRU, and much evidence and theoretical argument supportive of the Keynesian Phillips curve, the NRU hypothesis remains ascendant. The hypothesis has had an enormous impact on macroeconomic theory and policy. 2018 is the 50th anniversary of Friedman's introduction of the NRU hypothesis. The anniversary offers an opportunity to challenge rather than celebrate it.

scholarly journals Offre globale en économie ouverte, courbe de Phillips et détermination du taux de chômage naturel : une reformulation théorique

2009 ◽  
Vol 55 (3) ◽  
pp. 375-396 ◽  
Author(s):  
Louis Phaneuf
Keyword(s):  
Phillips Curve ◽  
Structural Model ◽  
Reduced Form ◽  
Supply Side ◽  
Special Importance ◽  
Natural Rate ◽  
Explanatory Variables ◽  
Natural Rate Of Unemployment ◽  
Long Run

Criticizing the fact the Phillips curve wage and price equations are usually reduced form or quasi-reduced form equations without an explicit structural model behind, this article is an attempt to provide a supply side based structural model of the Phillips curve. Of special importance are the theoretical specifications of the resulting wage and price equations that include several new explanatory variables and especially policy variables. After having demonstrated under what structural conditions the price-Phillips curve of this model will be a vertical in the long run, the model is solved for the theoretical specification of the natural rate of unemployment.

scholarly journals Market Power, NAIRU, and the Phillips Curve

2020 ◽  
Vol 2020 ◽  
pp. 1-18
Author(s):  
Derek Zweig
Keyword(s):  
Interest Rates ◽  
Phillips Curve ◽  
Functional Form ◽  
The United States ◽  
Medium Term ◽  
Natural Rate ◽  
Natural Rate Of Unemployment ◽  
Long Run ◽  
Weak Evidence ◽  
Short Run

We explore the relationship between unemployment and inflation in the United States (1949-2019) through both Bayesian and spectral lenses. We employ Bayesian vector autoregression (“BVAR”) to expose empirical interrelationships between unemployment, inflation, and interest rates. Generally, we do find short-run behavior consistent with the Phillips curve, though it tends to break down over the longer term. Emphasis is also placed on Phelps’ and Friedman’s NAIRU theory using both a simplistic functional form and BVAR. We find weak evidence supporting the NAIRU theory from the simplistic model, but stronger evidence using BVAR. A wavelet analysis reveals that the short-run NAIRU theory and Phillips curve relationships may be time-dependent, while the long-run relationships are essentially vertical, suggesting instead that each relationship is primarily observed over the medium-term (2-10 years), though the economically significant medium-term region has narrowed in recent decades to roughly 4-7 years. We pay homage to Phillips’ original work, using his functional form to compare potential differences in labor bargaining power attributable to labor scarcity, partitioned by skill level (as defined by educational attainment). We find evidence that the wage Phillips curve is more stable for individuals with higher skill and that higher skilled labor may enjoy a lower natural rate of unemployment.

Comparative Properties of Models of the UK Economy

1990 ◽  
Vol 133 ◽  
pp. 91-115 ◽  
Author(s):  
P.G. Fisher ◽  
D.S. Turner ◽  
K.F. Wallis ◽  
J.D. Whitley
Keyword(s):  
Phillips Curve ◽  
Demand Management ◽  
Nominal Wage ◽  
Natural Rate ◽  
Price Inflation ◽  
Trade Off ◽  
Natural Rate Of Unemployment ◽  
Long Run ◽  
Recent Developments ◽  
The Uk

The nature of the association between inflation and the level of unemployment has been a persistent issue of controversy over the last three decades. Initially, attention focussed on the statistical relationship between nominal wage inflation and unemployment— the Phillips curve—which could be seen equally as a relationship between price inflation and unemployment, if prices are a constant mark-up on wages. This was quickly adopted as a menu for policy choice, describing the trade-off between increases in unemployment and reductions in inflation. By the 1970s, however, the question was whether a long-run trade-off existed at all, the OECD economies having experienced rising unemployment and, simultaneously, rising inflation. The subsequent re-examination of labour market behaviour introduced the concept of an equilibrium rate (the natural rate) of unemployment which, in the monetarist view, was not amenable to demand management policies. More recent developments reflect a growing concern with the supply side of the economy, including the question of what determines the non accelerating inflation rate of unemployment (NAIRU).

scholarly journals Time to Ditch the NAIRU

1997 ◽  
Vol 11 (1) ◽  
pp. 93-108 ◽  
Author(s):  
James K Galbraith
Keyword(s):  
Inflation Rate ◽  
Phillips Curve ◽  
Social Costs ◽  
Natural Rate ◽  
Natural Rate Of Unemployment

The concept of a natural rate of unemployment, or nonaccelerating inflation rate of unemployment (NAIRU), remains controversial after twenty-five years. This essay presents a brief for no-confidence, in four parts. First, the theoretical case for the natural rate is not compelling. Second, the evidence for a vertical Phillips curve and the associated accelerationist hypothesis that lowering unemployment past the NAIRU leads to unacceptable acceleration of inflation is weak. Third, economists have failed to reach professional consensus on estimating the NAIRU. Fourth, adherence to the concept as a guide to policy has major social costs but negligible benefits.

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